PREMIER CAPITAL GROWTH FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
Premier Capital Growth Fund completed its latest fiscal half-year on
March 31, 1996. We are pleased to provide you with this report on the
investment results for that six-month period. In addition to information on
the activities and results of the Fund, we also include an assessment of the
U.S. economy and a look at the market for equities in general.
ECONOMIC REVIEW
In April, the U.S. economy embarked on its sixth expansion year for this
business cycle. However, the previous year was one of slow economic expansion
with the picture remaining sluggish in the past six months. This kept
inflation moderate, but it also began to erode corporate profitability. The
combination of slow economic growth and low inflation helped pull interest
rates down sharply in 1995. While short-term interest rates remained quite
low until very recently, long-term rates have risen substantially since
January. Higher long-term rates reflect a shift in the market's view about
the direction of the economy. Long-term rates that rise above short-term
rates indicate a steep yield curve, which is favorable for sustained economic
growth. Hence, we believe that this business cycle could last still longer.
Although the economy surged 3.6% in the third quarter of 1995, it then
slowed to only 0.5% in the fourth quarter, and remains below trend in early
1996. Sequential events have made the economy volatile in the last six
months: the Boeing and GM strikes, the Federal shutdown and the severe winter
weather. These shocks created caution in key economic sectors. Since the
third quarter, real consumer spending has increased only 1.9%. Capital
spending slowed from its previously strong pace. And weak overseas economies
may now be curbing exports. On the plus side, job growth has been steady,
boosting real disposable income by 3.6% - almost double the rise in consumer
spending. New orders for capital goods are robust. Housing construction and
sales are at high levels. The uncertainty of demand nevertheless kept
producers cautious, leaving inventories quite lean in many economic sectors.
Low inventories relative to demand provide a force for sustained economic
growth and could spur the economy to somewhat faster growth in coming months.
Consumer price inflation held near its 3% trend in the last six months.
But evidence of pricing power is already emerging: Lean inventories mean that
retailers needn't discount as much; tight housing markets have boosted
housing prices in some regions; consumer spending strength has bolstered
prices at hotels, airlines and cruise ships; high crude oil prices are
forcing gasoline prices upwards; and there is early evidence of rising real
wages. The market has only recently begun to focus on the potential for
rising price inflation that could result from an acceleration in economic
growth. Reported higher inflation could justify a Federal Reserve Board
policy switch towards tightening.
Corporate profits fared well in the low inflation, slow growth
environment of 1995. Operating profits on S&P 500 companies rose an estimated
17% above 1994 levels, helped by the weak dollar and more corporate
restructuring. However, slower economic growth at home and declining growth
abroad began to take their toll on profits toward year-end. Current market
expectations are that profits will grow only 4.2% in 1996, tempered by a slow
economy and by the ending of this cycle's phase of corporate restructuring.
Key determinants of this year's ultimate profit growth will be whether the
U.S. economy can grow faster than the 2% expected by the market, how soon
foreign economies recover and whether domestic companies will be able to
raise prices.
Interest rates fell considerably in 1995, but have moved upwards since
January. Short-term rates have risen marginally, from 4.76% to 5.00%, as
expectations for further easing by the Federal Reserve are now disappearing.
Long-term bond yields have risen more substantially, from a low of 5.96% to
near 6.90%. There are two key reasons for higher long-term rates. First, the
economy is proving fundamentally strong enough to survive the shocks of
recent months. And second, hopes for a balanced budget agreement this year
are dampened, making this a contentious political issue not likely to be
resolved until election time.
We believe that the steeper yield curve that has developed in recent
months bodes well for sustained economic growth. In addition, low inventories
could spur a period of faster economic growth in coming months. This raises a
key concern whether faster economic growth would ignite inflation this time
around.
MARKET OVERVIEW
The past six months have witnessed one of the strongest rises in average
stock prices in many years. This was based on the combination of low interest
rates, which continued for most of the period; a very moderate rate of
inflation; and strong corporate profits.
To be sure, the rising tide of stock prices did not lift all the boats.
Heavily capitalized blue chip companies represented in the Dow Jones
Industrial Average rose more than the general market, as measured by the
Standard & Poor's 500 Composite Stock Price Index. However, this was also a
good period for small capitalization stocks that appear in the Russell 2000
Index.
It would seem that many investors, disappointed with the drop in yields
on fixed-income securities, are taking money out of bond funds and money
market assets to purchase common stocks, either directly or through mutual
funds. This trend is confirmed by the impressive growth of equity mutual fund
assets. One major factor has been the growth of 401(k) and other retirement
plans that give employees the right to choose their own investment vehicles.
But quite apart from retirement plans, individual investors and large
institutions have also been seeking out equities on their own.
As the latest fiscal period for your Fund closed, the rush into equities
was given pause by signs that the pace of economic activity was speeding up,
bringing with it the threat of higher interest rates. To what extent this
will cool down the equity market remains to be seen.
PORTFOLIO FOCUS
For the six months under review, Premier Capital Growth Fund, Class A
shares returned 2.57%. Class B, C and R shares, available only since January
3, 1996, returned 2.90%, 2.90% and 3.17%, respectively, for the three months
ended March 31, 1996.*
During the same period, October 1995 through March 1996, the Dow Jones
Industrial Average had a total return of 18.04% and the Standard & Poor's 500
Composite Stock Price Index returned 11.70%.** For the last three months, the
Dow Jones returned 9.80% and the S&P 500 was up 5.37%.
There were two principal reasons why the Fund underperformed the major
stock market benchmarks in the last three and six months. The first reason
was that the Fund was underweighted, compared to broad market indexes, in the
energy sector, a particularly strong performer in recent months. The second
factor was selling pressure that affected a few specific stocks in the Fund's
portfolio, especially in the health care and technology areas. However, we
have every confidence that these pressures are temporary. We believe the
stocks affected should resume their long-term growth patterns soon.
It may be relevant to report that, despite recent market volatility, the
Fund is fully invested. We are still convinced that portfolio exposure in the
U.S. should continue to focus on stocks that we expect will show continued
earnings growth in 1996-97; companies with new products and production
growth; and smaller capitalization companies expected to show an aggressive
growth pattern.
In the first group (earnings) we would place computer networking and data
storage companies; office equipment; consumer growth situations; insurance;
communications and entertainment; and specialty chemicals.
In the second group (new products and production) are our selections in
pharmaceutical and biotechnology companies and certain oil and gas stocks.
The third group (aggressive growth small caps) consists of financial
services, small cap pharmaceuticals and biotechnology, auto parts companies,
selected medical services and telecommunications stocks.
In the current economic environment, we consider that near-term and 1997
earnings growth expectations are the key to absolute stock market
performance. We continue to identify attractively valued strong growth
situations across many industry sectors and among large, medium and small
capitalization stocks.
Sincerely,
[Michael L. Schonberg signature logo]
Michael L. Schonberg
Portfolio Manager
April 16, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid. The figures quoted do not reflect the maximum front-end load in the
case of Class A shares or the contingent deferred sales charge in the case of
Class B and Class C shares.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. Unlike
the Fund, which can utilize a broad range of investment techniques, both the
Dow Jones Industrial Average and the Standard & Poor's 500 Composite Stock
Price Index are widely accepted unmanaged indexes of stock market
performance.
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND
STATEMENT OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
COMMON STOCKS-107.6% SHARES VALUE
_______ _______
<S> <C> <C>
COMMERCIAL SERVICES-.9% Quintel Entertainment................. 450,000 (a) $
5,062,500
______
CONSUMER DURABLES-4.8% Ford Motor............................ 750,000 25,781,250
______
CONSUMER
NON-DURABLES-8.8% Philip Morris Cos...................... 250,000 21,937,500
Quicksilver............................ 150,000 (a) 4,762,500
ThermoLase............................. 150,000 3,637,500
Tommy Hilfiger......................... 250,000 (a) 11,468,750
Vista 2000............................. 500,000 (a) 5,000,000
______
46,806,250
______
CONSUMER SERVICES-9.4% Alliance Entertainment................. 400,000 (a) 3,750,000
Casino Data Systems.................... 670,000 (a) 11,390,000
IDEON Group............................ 412,900 4,593,513
Metromedia International Group......... 1,450,000 (a) 19,575,000
TCA Cable TV........................... 375,000 10,921,875
______
50,230,388
______
ELECTRONIC
TECHNOLOGY-21.4% Advanced Photonix, Cl. A............... 515,000 1,512,813
Bay Networks........................... 350,000 (a) 10,762,500
C-Cube Microsystems.................... 175,000 (a) 9,187,500
Cisco Systems.......................... 560,000 25,970,000
Cree Research.......................... 575,000 8,768,750
Digital Equipment...................... 200,000 11,025,000
Gilat Satellite Networks............... 107,000 (a) 2,594,750
Seagate Technology..................... 475,000 (a) 26,006,250
Storage Technology..................... 700,000 18,287,500
______
114,115,063
______
ENERGY MINERALS-1.9% Anadarko Petroleum..................... 100,000 5,550,000
NorAm Energy........................... 500,000 4,625,000
______
10,175,000
______
FINANCE-6.8% ACE Limited............................ 320,000 14,280,000
ASTA Funding........................... 150,000 (a) 712,500
CNA Financial.......................... 60,000 6,675,000
MGIC Investment........................ 45,000 2,452,500
National Auto Credit................... 190,000 (a) 2,873,750
20th Century Industries................ 350,000 5,862,500
Titan.................................. 250,000 3,437,500
______
36,293,750
______
HEALTH SERVICES-1.4% Complete Management.................... 350,000 (a) 2,931,250
Northstar Health Services.............. 235,000 690,312
OnGard Systems......................... 200,000 (a) 1,450,000
PREMIER CAPITAL GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
_______ _______
HEALTH SERVICES (CONTINUED)......... OncorMed 364,000 (a) $ 2,320,500
______
7,392,062
______
HEALTH TECHNOLOGY-24.1% Biogen................................. 175,000 10,412,500
Cephalon............................... 175,000 (a) 4,528,125
Forest Labs............................ 500,000 24,375,000
Fuisz Technologies..................... 800,000 (a) 21,600,000
Gilead Sciences........................ 450,000 (a) 12,937,500
Guidant................................ 175,986 9,525,242
Guilford Pharmaceuticals............... 150,000 (a) 3,356,250
Lilly (Eli)............................ 100,000 6,500,000
MacroChem.............................. 662,500 (a) 3,726,562
NeoPharm............................... 100,000 (a) 1,162,500
ONCOR.................................. 800,000 4,300,000
Teva Pharmaceutical Industries, A.D.R.. 680,000 26,180,000
______
128,603,679
______
INDUSTRIAL SERVICES-1.1% Global Marine.......................... 579,500 5,795,000
______
PROCESS INDUSTRIES-6.4% Chromatics Color Sciences 155,000 (a) 1,269,063
Grace (W.R.)........................... 200,000 15,650,000
Morton International................... 450,000 17,268,750
______
34,187,813
______
PRODUCER
MANUFACTURING-11.2% American Standard...................... 200,000 (a) 5,850,000
Motorcar Parts & Accessories........... 250,000 (a) 3,937,500
Olin................................... 300,000 26,100,000
Raychem................................ 375,000 24,187,500
______
60,075,000
______
RETAIL TRADE-2.0% Federated Department Stores 325,000 10,481,250
______
TECHNOLOGY SERVICES-6.4% Informix............................... 700,000 18,462,500
Mercury Interactive.................... 795,000 (a) 12,720,000
Sterling Commerce...................... 100,000 (a) 3,075,000
______
34,257,500
______
UTILITIES-.6% AMNEX.................................. 800,000 3,150,000
______
FOREIGN-.4% Cinar Films, Cl. B..................... 150,000 (a) 2,250,000
______
TOTAL COMMON STOCKS
(cost $518,336,702).................. $574,656,505
=======
PREMIER CAPITAL GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-.0% AMOUNT VALUE
_______ _______
U.S. TREASURY BILLS; 5.32%, 4/11/96
(cost $ 14,979)...................... $ 15,000 $ 14,974
=======
TOTAL INVESTMENTS (cost $518,351,681) ................................ 107.6% $574,671,479
====== =======
LIABILITIES, LESS CASH AND RECEIVABLES (7.6%) $ (40,541,046)
====== =======
NET ASSETS.................................................................. 100.0% $534,130,433
====== =======
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See independent accountants' review report and notes to financial statements.
PREMIER CAPITAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996 (UNAUDITED)
ASSETS:
Investments in securities, at value
(cost $518,351,681)-see statement..................................... $574,671,479
Cash.................................................................... 603,157
Receivable for investment securities sold............................... 1,567,496
Dividends and interest receivable....................................... 344,061
Receivable for subscriptions to Common Stock............................ 493
Prepaid expenses........................................................ 54,160
______
577,240,846
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 355,719
Due to Distributor...................................................... 114,023
Bank loans payable-Note 2............................................... 31,000,000
Payable for investment securities purchased............................. 9,622,150
Payable for Common Stock redeemed....................................... 1,453,512
Loan committment fees and interest payable.............................. 230,091
Accrued expenses........................................................ 334,918 43,110,413
______ ______
NET ASSETS ................................................................ $534,130,433
=======
REPRESENTED BY:
Paid-in capital......................................................... $486,194,730
Accumulated investment (loss)-net....................................... (966,239)
Accumulated net realized (loss) on investments.......................... (7,417,856)
Accumulated net unrealized appreciation on investments-Note 4(b)........ 56,319,798
______
NET ASSETS at value......................................................... $534,130,433
=======
Shares of Common Stock outstanding:
Class A Shares
(200 million shares of $1.00 par value authorized).................... 34,913,016
=======
Class B Shares
(200 million shares of $1.00 par value authorized).................... 67
=======
Class C Shares
(200 million shares of $1.00 par value authorized).................... 67
=======
Class R Shares
(200 million shares of $1.00 par value authorized).................... 67
=======
NET ASSET VALUE per share:
Class A Shares
($534,127,361 / 34,913,016 shares).................................... $15.30
=======
Class B Shares
($1,023 / 67 shares).................................................. $15.27
=======
Class C Shares
($1,023 / 67 shares).................................................. $15.27
=======
Class R Shares
($1,026 / 67 shares).................................................. $15.31
=======
See independent accountants' review report and notes to financial statements.
PREMIER CAPITAL GROWTH FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $19,179 foreign taxes withheld at source)...... $ 2,296,000
Interest.............................................................. 268,787
_____
TOTAL INCOME...................................................... $ 2,564,787
EXPENSES:
Management fee-Note 3(a).............................................. 2,074,158
Shareholder servicing costs-Note 3(c)................................. 761,240
Interest-Note 2....................................................... 425,300
Loan commitment fees-Note 2........................................... 63,338
Professional fees..................................................... 48,424
Directors' fees and expenses-Note 3(d)................................ 42,576
Custodian fees........................................................ 35,979
Prospectus and shareholders' reports.................................. 35,720
Miscellaneous......................................................... 1,827
_____
TOTAL EXPENSES.................................................... 3,488,562
______
INVESTMENT (LOSS)-NET............................................. (923,775)
______
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments (including options transactions)-Note 4(a) $(7,459,073)
Net realized (loss) on forward currency exchange contracts-Note 4(a);
Short transactions.................................................... (157,429)
_____
NET REALIZED (LOSS)................................................... (7,616,502)
Net unrealized appreciation on investments.............................. 22,432,765
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 14,816,263
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $13,892,488
======
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1996
1995 (UNAUDITED)
_______ _________
<S> <C> <C>
OPERATIONS:
Investment income (loss)-net....................................... $ 14,579,338 $ (923,775)
Net realized gain (loss) on investments............................ 39,414,693 (7,616,502)
Net unrealized appreciation on investments for the period.......... 6,873,811 22,432,765
________ _______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... 60,867,842 13,892,488
________ _______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net;
Class A shares................................................... (16,111,729) (9,496,919)
Net realized gain on investments;
Class A shares................................................... (8,422,040) (38,124,274)
________ _______
TOTAL DIVIDENDS.............................................. (24,533,769) (47,621,193)
________ _______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares................................................... 82,126,165 60,567,189
Class B shares................................................... -- 1,000
Class C shares................................................... -- 1,000
Class R shares................................................... -- 1,000
Dividends reinvested;
Class A shares................................................... 21,932,842 42,441,955
Cost of shares redeemed;
Class A shares................................................... (138,675,507) (107,230,475)
________ _______
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... (34,616,500) (4,218,331)
________ _______
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 1,717,573 (37,947,036)
NET ASSETS:
Beginning of period................................................ 570,359,896 572,077,469
________ _______
End of period [including undistributed investment income-net;
$1,801,170 in 1995 and accumulated investment (loss)-net
of ($966,239) in 1996.].......................................... $ 572,077,469 $ 534,130,433
======== =======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
_____________________________________________________
CLASS A CLASS B
-------------------------------------- ----------
YEAR ENDED SIX MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, MARCH 31, 1996 MARCH 31, 1996*
1995 (UNAUDITED) (UNAUDITED)
________ ________ ________
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................. 5,218,666 3,890,547 67
Shares issued for dividends reinvested... 1,526,294 2,844,634 --
Shares redeemed.......................... (8,826,816) (6,900,926) --
_____ _____ _____
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING................. (2,081,856) (165,745) 67
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------
CLASS C CLASS R
________ ________
PERIOD ENDED PERIOD ENDED
MARCH 31, 1996* MARCH 31, 1996*
(UNAUDITED) (UNAUDITED)
________ ________
CAPITAL SHARE TRANSACTIONS:
<S> <C> <C>
Shares sold.............................. 67 67
Shares issued for dividends reinvested... -- --
Shares redeemed.......................... -- --
_____ _____
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING................. 67 67
====== ======
*From January 3, 1996 (commencement of initial offering) to March 31,
1996.
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER CAPITAL GROWTH FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
CLASS A CLASS B CLASS C CLASS R
---------------------------------------------------- ------ ------ ------
SIX MONTHS PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
YEAR ENDED SEPTEMBER 30, 1996 1996(1) 1996(1) 1996(1)
_________________________________________
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED) (UNAUDITED) (UNAUDITED (UNAUDITED)
---- ---- ---- ---- ---- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............. $14.31 $17.72 $18.11 $18.53 $15.35 $16.31 $14.84 $14.84 $14.84
___ ___ ___ ___ ___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income (loss)-net .37 .32 .21 .40 .40 (.02) (.05) (.05) (.02)
Net realized and unrealized gain
(loss) on investments. 3.80 1.83 1.82 (.56) 1.23 .41 .48 .48 .49
___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL FROM INVESTMENT
OPERATIONS........ 4.17 2.15 2.03 (.16) 1.63 .39 .43 .43 .47
___ ___ ___ ___ ___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment
income-net............ (.76) (.39) (.24) (.80) (.44) (.28) -- -- --
Dividends from net realized
gain on investments... -- (1.37) (1.37) (2.22) (.23) (1.12) -- -- --
___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS... (.76) (1.76) (1.61) (3.02) (.67) (1.40) -- -- --
___ ___ ___ ___ ___ ___ ___ ___ ___
Net asset value, end of period $17.72 $18.11 $18.53 $15.35 $16.31 $15.30 $15.27 $15.27 $15.31
=== === === === === === === === ===
TOTAL INVESTMENT
RETURN(2)............... 30.27% 13.28% 12.04% (1.50%) 11.21% 2.57%(3) 2.90%(3) 2.90%(3) 3.17%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to
average net assets.... .97% .97% 1.02% 1.03% 1.03% .54%(3) .44%(3) .44%(3) .20%(3)
Ratio of interest expense, loan
committment fees and
dividends on securities sold
short to average net assets .17% .10% .04% .09% .08% .09%(3) .09%(3) .09%(3) .09%(3)
Ratio of net investment income
(loss) to average net assets 2.13% 1.74% 1.24% 2.10% 2.55% (.17%)(3) (.35%)(3) (.35%)(3) (.11%)(3)
Portfolio Turnover Rate. 81.02% 141.67% 102.23% 158.05% 298.60% 68.91%(3) 68.91%(3) 68.91%(3) 68.91%(3)
Average commission rate paid $.0345 $.0345 $.0345 $.0345
Net Assets, end of period
(000's Omitted)....... $494,342 $520,895 $596,369 $570,360 $572,077 $534,127 $1 $1 $1
(1) From January 3, 1996 (commencement of initial offering) to March 31, 1996.
(2) Exclusive of sales charges.
(3) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Equity Fund's, Inc., (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified
open-end management investment company and operates as a series company
currently offering two series, including the Premier Capital Growth Fund (the
"Fund"). The Fund's investment objective is capital growth. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
On January 2, 1996, the Company's Board of Directors approved a change of
the Company's name, effective, from "Premier Capital Growth Fund, Inc." to
"Premier Equity Fund's, Inc." and to rename the existing Fund Premier Capital
Growth Fund.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund offers Class A, Class B, Class C
and Class R shares. Class A shares are subject to a sales charge imposed at
the time of purchase, Class B shares are subject to a contingent deferred
sales charge imposed at the time of redemption made within six years of
purchase, Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase and Class R shares are sold at net asset value per share only to
institutional investors. Other differences between the four Classes include
the services offered to and the expenses borne by each Class and certain
voting rights.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
PREMIER CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain
and loss from securities transactions are recorded on the identified cost
basis. Dividend income is recognized on the ex-dividend date and interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Fund not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-BANK LINES OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
$76 million under a short-term unsecured line of credit. In connection
therewith, the Fund has agreed to pay commitment fees at an annual rate of
.375 of 1% on the unused portion of the first $46 million of the line of
credit. No commitment fee is charged on the additional $30 million. Interest
on borrowings is charged at rates which are related to Federal Funds rates in
effect. Outstanding borrowings on March 31, 1996 under the line of credit,
amounted to $31 million, at an annualized interest rate of 6.78%.
The average daily amount of short-term debt outstanding during the six
months ended March 31, 1996 was approximately $13.1 million, with a related
weighted average annualized interest rate of 6.49% (based upon actual
interest expense, not including commitment fees, for the period). The maximum
amount of such debt outstanding at any time during the six months ended March
31, 1996, was $52.7 million.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings (which, in the
view of Stroock & Stroock & Lavan, counsel to the Fund, also contemplates
loan commitment fees and dividends on securities sold short), brokerage
commissions and extraordinary expenses, with respect to Class A exceed 1 1/2%
of the average value of the Fund's net assets, attributable to Class A
shares, for any full fiscal year and with respect to the other Classes of the
Fund, the expense limitation of any state having jurisdiction over the Fund.
No expense reimbursement was required for the six months ended March 31,
1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $12,424 during the six months ended March 31, 1996 from commissions
earned on sales of Fund shares.
PREMIER CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(B) Effective January 3, 1996, the Fund adopted a Distribution Plan,
pursuant to Rule 12b-1 under the Act, to which it pays
the Distributor for distributing the Fund's Class B and Class C shares at an
annual rate of .75 of 1% of the value of the average daily net assets of
Class B and Class C shares, respectively. For the period ended March 31,
1996, $2 was charged to the Fund for the Class B shares and $2 was charged to
the Fund for the Class C shares.
(C) On January 2, 1996, the Fund adopted a Shareholder Services Plan,
pursuant to which it pays a fee to the Distributor, for the provision of
certain services to Fund shareholders at the annual rate of .25 of 1% of the
value of the average daily net assets of Class A, Class B and Class C shares,
respectively. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the period ended March 31, 1996,
$341,487 was charged to Class A shares and for the period January 3, 1996
through March 31, 1996, no amounts were charged to Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Prior to January 2, 1996, the Fund's Shareholder Services Plan provided
for the Fund to reimburse Dreyfus Service Corporation an amount not to exceed
an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. For the period
October 1, 1995 through January 1, 1996, the Fund was charged an aggregate of
$158,335 pursuant to the Shareholders Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $118,515 for the period from
December 1, 1995 through March 31, 1996.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Company an annual fee of $4,500 and an attendance fee of
$500 per meeting. The Chairman of the Board receives an additional 25% of
such compensation.
NOTE 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short term securities, forward currency exchange contracts and
options transactions, during the six months ended March 31, 1996 amounted to
$394,050,257 and $409,116,001, respectively.
The Fund enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency
PREMIER CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
exchange contracts, the Fund is obligated to buy or sell a foreign currency
at a specified rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract increases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract decreases between those dates. With respect to purchase
of forward currency exchange contracts, the Fund would incur a loss if the
value of the contract decreases between the date the forward contract is
opened and the date the forward contract is closed. The Fund realizes a gain
if the value of the contract increases between those dates. The Fund is also
exposed to credit risk associated with counter party nonperformance on these
forward currency exchange contracts which is typically limited to the
unrealized gains on such contracts that are recognized in the statement of
assets and liabilities. At March 31, 1996, there were no forward currency
exchange contracts outstanding.
In addition, the following summarizes the Fund's covered call options
written transactions for the six months ended March 31, 1996:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
________________
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST (LOSS)
_______ _______ _______ _______
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding
September 30, 1995.................... 1,700 $ 462,384
Contracts written....................... 1,700 1,099,863
_______ _______
3,400 $1,562,247
_______ _______
Contracts Terminated;
Closed................................ 3,400 $1,562,247 $6,199,326 $(4,637,079)
_______ _______ ======= ========
Contracts outstanding March 31, 1996..... 0 0
======= =======
</TABLE>
The Fund may write or (sell) options in order to gain exposure to or
protect against changes in the market. As a writer of
call options, the Fund receives a premium at the outset and then bears the
market risk of unfavorable changes in the price of the financial instrument
underlying the option. Generally, the Fund would incur a gain, to the extent
of the premium, if the price of the underlying financial instrument decreases
between the date the option is written and the date on which the option is
terminated. Generally, the Fund would realized a loss, if the price of the
financial instrument increases between those dates.
(B) At March 31, 1996, accumulated net unrealized appreciation on
investments was $56,319,798, consisting of $88,932,223 gross unrealized
appreciation and $32,612,425 gross unrealized depreciation.
At March 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER CAPITAL GROWTH FUND
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
PREMIER CAPITAL GROWTH FUND
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Capital Growth Fund, one
of the Portfolios constituting Premier Equity Fund, Inc., as of March 31,
1996, and the related statements of operations and changes in net assets and
financial highlights for the six month period ended March 31, 1996. These
financial statements and financial highlights are the responsibility of the
Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
September 30, 1995 and financial highlights for the five years in the period
ended September 30, 1995 and in our report dated November 7, 1995, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst and Young LLP signature logo]
New York, New York
May 8, 1996
PREMIER CAPITAL GROWTH FUND
PROXY RESULTS (UNAUDITED)
A special meeting of stockholders of the Fund was held on November 29,
1995, at which shareholders approved an amendment and restatement of the
Fund's charter by vote of 20,343,135.904 shares in favor of, and
1,678,127.387 shares against the proposal, with 1,773,608.473 shares
abstaining (including broker non-votes).
[Dreyfus lion "d" logo]
PREMIER CAPITAL GROWTH FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 009SA963
[Dreyfus logo]
Semi-Annual Report
Premier Capital
Growth Fund
March 31, 1996
PREMIER GROWTH AND INCOME FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
For its first fiscal period, from its inception on December 29, 1995
through March 31, 1996, the total return for the Premier Growth and Income
Fund Class A shares was 30.50%, Class B shares was 30.02%, Class C shares
30.08% and Class R shares 30.54%.* This compares with a return of 5.37% for
the Standard and Poor's 500 Composite Stock Price Index.**
There were several reasons for the excellent total return of the Fund
during this initial period. First, it was a favorable period for the overall
stock market. Second, the Fund was invested in several dozen holdings. We
believe this degree of concentration provides a combination of some portfolio
diversification together with a substantial sensitivity to the performance of
individual holdings. Third, the Fund was fortunate to have several individual
investments that performed quite well during the period. Given its relative
concentration, the Fund's performance was sensitive to the performance of
these individual holdings.
Several of the holdings that performed well during the period rebounded
off depressed price levels. For example, Santa Fe Pacific Gold was depressed
by tax-loss selling late in 1995 and has rebounded in early 1996. Arkansas
Best was depressed to its lowest stock price in several years prior to its
inclusion in your Fund's portfolio. Since then, its stock price has recovered
as investors began to focus on the long-term value of its business despite
its short-term problems.
Some of the small-cap technology companies owned by the Fund were bid up
sharply by favorable fundamentals and market enthusiasm. Red Brick Systems is
a small company which is a leader in the rapidly growing data warehousing
business. Omnipoint is involved in the PCS wireless communications business,
both as an equipment manufacturer and as the builder of a system in New York
City. First USA Paymentech is a rapidly growing credit card processing firm.
The Premier Growth and Income Fund has the flexibility to invest in a
variety of large-cap, midcap and small-cap companies. The ability to invest
in small-cap companies was helpful to the Fund's performance during the
period. The portfolio also included investments in such major companies as
Phillips Petroleum, AlliedSignal, Time Warner, Occidental Petroleum and
midcap companies such as Witco, York International, and Forest Laboratories,
Class A.
There is no requirement that each security in your Fund provide both an
income and a growth opportunity. The portfolio is thus a mix of securities
selected largely for their growth opportunities and those selected primarily
for their income generation. This provides the flexibility to use a variety
of different securities to achieve the Fund's objectives.
For the income portion of the combined objectives of growth and income,
your Fund was invested in utilities such as UGI, SBC Communications, Entergy,
Texas Utilities and GTE, each of which has a dividend yield in excess of the
S&P 500. There are also investments in two REITs and one convertible
preferred stock.
Several long-term positive forces have provided a supportive background
for the financial markets. First, the trend of inflation has remained
generally favorable in the last several years. Second, we are in the early
stages of a key demographic shift as the baby boom generation begins to focus
on the need for a permanent program of saving to provide for future
retirement income. Third, U.S. productivity growth in manufacturing has been
favorable.
We believe that the period of strongest earnings growth in the U.S.
economy is behind us for the time being. Corporate cost-cutting is very far
advanced in many companies as are the benefits of refinancing
high-cost debt. Many multinational companies have already reaped a
significant portion of the profit benefits of the past decline in the dollar.
Thus we believe that strong profit growth will become increasingly scarce
over the next year. Many of the positions in the Fund are companies which we
believe have a good chance of sustaining strong earnings growth even in this
more challenging environment. While overall market valuations have risen, we
continue to find good companies available in the stock market at reasonable
valuation levels.
The active stock market of early 1996 provided favorable opportunities
for capital appreciation. Shareholders should be aware, however, that the
Fund's total return in this period was unusual. We would be surprised if it
were to be repeated even if market conditions are favorable in the balance of
1996.
We appreciate the willingness of our shareholders to invest in the
Premier Growth and Income Fund. We will endeavor to realize a favorable
return for the shareholders commensurate with a reasonable level of risk.
There are likely to be alternating periods where the net asset value of the
Fund declines and periods when the net asset value rises. Our focus is on
achieving a satisfactory return for the shareholders over a period of time.
Very truly yours,
[Richard B. Hoey signature logo]
Richard B. Hoey
Portfolio Manager
April 29, 1996
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into consideration the
maximum initial sales charge in the case of Class A shares or the applicable
contingent deferred sales charge in the case of Class B and C shares.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.-Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged Index of stock market performance.
<TABLE>
<CAPTION>
PREMIER GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
COMMON STOCKS-69.3% SHARES VALUE
______ ______
<S> <C> <C>
BASIC AND
PROCESS INDUSTRIES-4.2% AlliedSignal......................... 3,000 $ 177,375
Witco................................ 4,500 158,625
_____
336,000
_____
CAPITAL GOODS-9.4% Albany International, Cl. A............ 10,000 200,000
Coltec Industries...................... 4,100 (a) 49,713
Giddings & Lewis....................... 10,000 190,000
Titan Wheel International.............. 10,000 165,000
York International..................... 3,000 147,000
_____
751,713
_____
CONSUMER-3.1% Canandaigua Wine, Cl. A................ 3,000 (a) 116,250
Ethan Allen Interiors.................. 5,000 (a) 131,250
_____
247,500
_____
ENERGY-9.5% Occidental Petroleum................... 4,000 107,000
Phillips Petroleum..................... 5,000 197,500
UGI.................................... 10,000 212,500
Western Gas Resources.................. 17,000 244,375
_____
761,375
_____
HEALTH CARE-10.4%. Forest Laboratories, Cl. A............. 2,000 97,500
Fuisz Technologies..................... 6,000 (a) 162,000
Heartstream............................ 8,000 (a) 124,000
Mentor................................. 6,500 151,937
ONCOR.................................. 20,000 (a) 107,500
Pharmaceutical Product Development..... 2,500 (a) 88,125
Ultrafem............................... 8,000 (a) 104,000
_____
835,062
_____
MEDIA AND
ENTERTAINMENT-2.1% Time Warner............................ 4,000 163,500
_____
MINING AND METALS-3.5% IMCO Recycling......................... 10,000 197,500
Santa Fe Pacific Gold.................. 5,000 80,000
_____
277,500
_____
REAL ESTATE-5.4% Crocker Realty Trust 20,000 (a) 192,500
Patriot American Hospitality........... 5,500 145,063
Prime Residential...................... 5,000 93,125
_____
430,688
_____
TECHNOLOGY-9.0% First Data............................. 2,500 176,250
First USA Paymentech................... 6,000 (a) 211,500
Forte Software......................... 1,000 (a) 40,500
Red Brick Systems...................... 2,000 (a) 86,000
ThermoQuest ........................... 5,000 85,000
PREMIER GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______
TECHNOLOGY (CONTINUED) Wonderware............................ 5,000 (a) $ 117,500
_____
716,750
_____
TELECOMMUNICATIONS-7.1% GTE..................................... 3,700 162,337
Omnipoint............................... 3,500 (a) 89,250
SBC Communications...................... 4,000 210,500
Teledata Communication.................. 10,000 (a) 106,250
_____
568,337
_____
TRANSPORTATION-1.1% Arkansas Best........................... 10,000 87,500
_____
UTILITIES-4.5% Entergy................................. 7,000 196,000
Texas Utilities......................... 4,000 165,500
_____
361,500
_____
TOTAL COMMON STOCKS
(cost $5,043,631).................... $5,537,425
=====
CONVERTIBLE AND PREFERRED STOCKS-1.2%
MEDIA AND ENTERTAINMENT: Station Casinos, 7.0%
(cost $100,268)...................... 2,000 $ 100,000
=====
PRINCIPAL
SHORT-TERM INVESTMENTS-8.8% AMOUNT
______
U.S. TREASURY BILLS: 5.25%, 4/25/1996....................... $ 153,000 $ 152,434
5.83%, 5/2/1996........................ 252,000 250,813
5.33%, 5/16/1996....................... 303,000 301,006
_____
TOTAL SHORT-TERM INVESTMENTS
(cost $704,606)...................... $ 704,253
=====
TOTAL INVESTMENTS (cost $5,848,505)......................................... 79.3% $6,341,678
======= =====
CASH AND RECEIVABLES (NET).................................................. 20.7% $1,652,772
======= =====
NET ASSETS.................................................................. 100.0% $7,994,450
======= =====
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
</TABLE>
See note to financial statements.
<TABLE>
<CAPTION>
PREMIER GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $5,848,505)-see statement....................................... $6,341,678
Cash.................................................................... 1,005,741
Receivable for subscriptions to Common Stock............................ 1,366,477
Receivable for investment securities sold............................... 227,947
Dividends receivable.................................................... 9,509
Due from The Dreyfus Corporation........................................ 11,922
_____
8,963,274
LIABILITIES:
Due to Distributor...................................................... $ 1,355
Payable for investment securities purchased............................. 944,980
Payable for Common Stock redeemed....................................... 253
Accrued expenses........................................................ 22,236 968,824
____ _____
NET ASSETS ................................................................ $7,994,450
=====
REPRESENTED BY:
Paid-in capital......................................................... $7,253,794
Accumulated undistributed investment income-net......................... 4,184
Accumulated undistributed net realized gain on investments.............. 243,299
Accumulated net unrealized appreciation on investments-Note 3........... 493,173
_____
NET ASSETS at value......................................................... $7,994,450
=====
Shares of Common Stock outstanding:
Class A Shares
(200 million shares of $1.00 par value authorized).................... 225,252
=====
Class B Shares
(200 million shares of $1.00 par value authorized).................... 177,050
=====
Class C Shares
(200 million shares of $1.00 par value authorized).................... 48,527
=====
Class R Shares
(200 million shares of $1.00 par value authorized).................... 40,044
=====
NET ASSET VALUE per share:
Class A Shares
($3,672,890 / 225,252 shares)......................................... $16.31
=====
Class B Shares
($2,878,895 / 177,050 shares)......................................... $16.26
=====
Class C Shares
($789,627 / 48,527 shares)............................................ $16.27
=====
Class R Shares
($653,038 / 40,044 shares)............................................ $16.31
=====
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
FROM DECEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 11,280
Cash dividends........................................................ 9,984
____
TOTAL INCOME.................................................... $ 21,264
EXPENSES:
Management fee-Note 2(a).............................................. 6,116
Shareholder servicing costs-Note 2(c)................................. 6,540
Directors' fees and expenses-Note 2(d)................................ 6,427
Audit fees............................................................ 3,375
Legal fees............................................................ 3,000
Distribution fees-Note 2(b)........................................... 2,855
Prospectus and shareholders' reports.................................. 2,627
Registration fees..................................................... 2,531
Custodian fees........................................................ 659
Miscellaneous......................................................... 359
____
TOTAL EXPENSES.................................................. 34,489
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 21,442
____
NET EXPENSES.................................................... 13,047
____
INVESTMENT INCOME-NET........................................... 8,217
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $243,299
Net unrealized appreciation on investments.............................. 493,173
____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 736,472
____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $744,689
=====
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM DECEMBER 29, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996 (UNAUDITED)
<S> <C>
OPERATIONS:
Investment income-net.................................................................... $ 8,217
Net realized gain on investments......................................................... 243,299
Net unrealized appreciation on investments for the period................................ 493,173
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... 744,689
_____
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares......................................................................... (2,842)
Class B shares......................................................................... (471)
Class C shares......................................................................... --
Class R shares......................................................................... (720)
_____
TOTAL DIVIDENDS.................................................................... (4,033)
_____
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................................... 3,430,840
Class B shares......................................................................... 2,693,595
Class C shares......................................................................... 636,320
Class R shares......................................................................... 500,000
Dividends reinvested:
Class A shares......................................................................... 2,366
Class B shares......................................................................... 352
Class R shares......................................................................... 720
Cost of shares redeemed:
Class A shares......................................................................... (2,359)
Class B shares......................................................................... (8,040)
_____
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............................. 7,253,794
_____
TOTAL INCREASE IN NET ASSETS..................................................... 7,994,450
NET ASSETS:
Beginning of period...................................................................... --
_____
End of period (including undistributed investment income-net of
$4,184 on March 31, 1996).............................................................. $7,994,450
=====
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------
CLASS A CLASS B CLASS C CLASS R
______ ______ ______ _____
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 225,253 177,543 48,527 40,000
Shares issued for dividends reinvested. 145 22 -- 44
Shares redeemed........................ (146) (515) -- --
______ ______ ______ _____
NET INCREASE IN SHARES OUTSTANDING 225,252 177,050 48,527 40,044
====== ====== ====== ======
</TABLE>
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from December 29, 1995
(commencement of operations) to March 31, 1996. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
PER SHARE DATA: CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net asset value, beginning of period.. $12.50 $12.50 $12.50 $12.50
___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net................. .02 .01 .01 .05
Net realized and unrealized gain
on investments...................... 3.80 3.75 3.76 3.78
___ ___ ___ ___
TOTAL FROM INVESTMENT OPERATIONS.... 3.82 3.76 3.77 3.83
___ ___ ___ ___
DISTRIBUTIONS;
Dividends from investment income-net.. (.01) -- -- (.02)
___ ___ ___ ___
Net asset value, end of period........ $16.31 $16.26 $16.27 $16.31
=== === === ===
TOTAL INVESTMENT RETURN*.................. 30.50% 30.02% 30.08% 30.54%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average
net assets*......................... .31% .53% .54% .29%
Ratio of net investment income to average
net assets*......................... .40% .18% .06% .31%
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation*............ .68% .68% .68% .68%
Portfolio Turnover Rate*.............. 91.89% 91.89% 91.89% 91.89%
Average commission rate paid.......... $.2003 $.2003 $.2003 $.2003
Net Assets, end of period (000's Omitted) $3,673 $2,879 $790 $653
*Not annualized.
</TABLE>
See notes to financial statements.
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Equity Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering two
series, including the Premier Growth and Income Fund (the "Fund") which
commenced operations on December 29, 1995. The Fund's investment objective is
long-term capital growth, current income and growth of income, consistent
with reasonable investment risk. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
As of March 31, 1996, Allomon Corporation, a subsidiary of Mellon Bank
Investments Corporation, the parent company of which is Mellon Bank, held
160,083 shares of the Fund.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund offers Class A, Class B, Class C
and Class R shares. Class A shares are subject to a sales charge imposed at
the time of purchase, Class B shares are subject to a contingent deferred
sales charge imposed at the time of redemption made within six years of
purchase, Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase and Class R shares are sold at net asset value per share only to
institutional investors. Other differences between the four Classes include
the services offered to and the expenses borne by each Class and certain
voting rights.
(A) PORTFOLIO VALUATION: The Fund's investments in securities (including
options and financial futures) are valued at the last sales price on the
securities exchange on which such securities are primarily traded or at the
last sales price on the national securities market. Securities not listed on
an exchange or the national securities market, or securities for which there
were no transactions, are valued at the average of the most recent bid and
asked prices, except for open short positions, where the asked price is used
for valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain
and loss from securities transactions are recorded on the identified cost
basis. Dividend income is recognized on the ex-dividend date and interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a
quarterly basis. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Fund, also contemplates dividends
and interest accrued on securities sold short) and extraordinary expenses,
exceed the expense limitation of any state having jurisdiction over the Fund,
the Fund may deduct from payments to be made to the Manager, or the Manager
will bear the amount of such excess to the extent required by state law. The
most stringent state expense limitation applicable to the Fund presently
requires reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1/2% of the first $30 million, 2% of the next $70 million and 1-1/2%
of the excess over $100 million of the average value of the Fund's net assets
in accordance with California "blue sky" regulations. The Manager has
currently undertaken from December 29, 1995 through December 31, 1996 to
reduce the management fee paid by or reimburse such excess expenses of the
Fund, to the extent that the Fund's aggregate annual expenses (excluding
distribution expenses and certain expenses as described above) exceed an
annual rate of 1.25 of 1% of the value of the Fund's average daily net
assets. The expense reimbursement, pursuant to the undertaking, amounted to
$21,442 for the period ended March 31, 1996.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under a Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund pays the Distributor for distributing the Fund's
Class B and Class C shares at an annual rate of .75 of 1% of the value of the
average daily net assets of Class B and Class C shares, respectively. For the
period ended March 31, 1996, $1,697 was chared to the Fund for the Class B
shares and $1,158 was charged to the Fund for the Class C shares.
PREMIER GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) The Fund has adopted a Shareholder Services Plan, pursuant to which it
pays a fee to the Distributor, for the provision
of certain services to Fund shareholders at the annual rate of .25 of 1% of
the value of the average daily net assets of Class A, Class B and Class C
shares, respectively. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. The Distributor may make
payments to Service Agents in respect of these services. The Distributor
determines the amounts to be paid to Service Agents. For the period ended
March 31, 1996, $708, $566 and $386 were charged to Class A, Class B and
Class C shares, respectively, and no amounts were charged to the Class R
shares, by the Distributor pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $358 for the period from December 29, 1995 through
March 31, 1996.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Company an annual fee of $4,500 and an attendance fee of
$500 per meeting. The Chairman of the Board receives an additional 25% of
such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short term securities, during the period ended March 31, 1996,
amounted to $7,294,301 and $2,394,534, respectively.
At March 31, 1996, accumulated net unrealized appreciation on investments
was $493,173, consisting of $530,442 gross unrealized appreciation and
$37,269 gross unrealized depreciation.
At March 31, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
[Dreyfus lion "d" logo]
PREMIER EQUITY FUNDS, INC.
PREMIER GROWTH AND INCOME FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 320SA963
[Dreyfus logo]
Semi-Annual Report
Premier Growth and Income Fund
March 31, 1996
